Financial Institutions have established various processes and associations related to the exchange of documents evidencing monetary transactions. Some types of documents have been historically encoded with magnetic ink so that information from the documents can be read by machine. Such documents have thus become known as magnetic ink character recognition (MICR) documents. Historically, these documents have been at least theoretically presented by delivery of physical paper. However, many types of payments and transactions are no longer enabled by paper. Additionally, even with traditional checks, check presentment and clearing is no longer accomplished using the physical checks, even though paper checks may be still be shipped between banks for reconciliation.
For some time, posting of financial transactions to accounts at a clearing institution has been accomplished through the use of a “cash letter” which contains detailed data on all the transactions to be cleared. At one time, cash letters were paper documents, but in the modern banking system, an “electronic cash letter” (ECL) is typically used. An ECL file can also be referred to as an “electronic cash presentment” (ECP) file. ECP files are formatted according to accepted industry standards. ECP files can be sent directly between financial institutions, but they are also often sent through clearing agents or a centralized, government based banking system, for example, the Federal Reserve System in the United States. Reconciliation and error recovery based on paper documents is subject to numerous exceptions as a result of paper handling and due to late delivery of documents. Thus, legislation has been promulgated which has allows banks to completely eliminate paper documents and accomplish reconciliation and other processes using electronic images of checks and other documents. In some cases, an “image replacement document” (IRD) can be used as a substitute for an image. An IRD file is also formatted according to accepted industry standards.
In any case, large financial institutions must present millions of items each day to clearing financial institutions for posting. A large franchise often assembles cash letter data at various geographic and branch locations throughout its operation. Thus, a large institution will often send multiple ECL or ECP files, with or without images, to another large financial institution in a given day or other relevant time period. This occurs, for example, when each division or branch of a capture bank sends a file of cash letter information to the same clearing institution or paying bank.